Helping companies understand cultural dimensions

Not understanding the way differing cultural dimensions can affect the way employees work, but also how countries practice business, can lead to miscommunications within teams and influence the success or failure of a business within that market.

When working on a globally diverse team, the cultural factors that affect international business are often overlooked and understated. Not understanding the way differing cultural dimensions can affect the way employees work, but also how countries practice business, can lead to miscommunications within teams and influence the success or failure of a business within that market. The first step in understanding the way culture affects employees, teams, and businesses is Geert Hofstede’s six cultural dimensions. Hofstede identified these dimensions as the major characteristics “that society needs to come to term with in order to organize itself”. These dimensions consist of: power distance, individualism, masculinity, uncertainty avoidance, long-term orientation, and indulgence. Studying these factors critically could change the way managers understand their teams and how multinational corporations communicate with one another.

The Six Cultural Dimensions

Power Distance

Refers to the extent of a country’s culture acceptance of the distribution of power; indicates the level of hierarchy a country has; the higher the score, the more of a hierarchical society they have

Example: India; even though the caste system has been banned in the country, their high score for power distance reflects that Indian society still uses a hierarchical society that believes an individual’s status is an indication of their worth

Individualism versus Collectivism

The extent to which a society defines themselves more as individuals with their own goals (individualistic) versus a society that defines themselves through social bonds with a group goal (collectivism)

-China: low individualistic score, more collectivist society that values group goals and objectives

Masculinity versus Femininity

Reflects the degree to which a society values competition and achievement through acquisition of material goods (masculine) versus the value of maintaining quality relationships with others (feminine).

Historically traditional countries such as Slovakia adopt more of the former, while more liberal countries such as the Netherlands adopt more of the latter.

Uncertainty Avoidance

Degree to which a country avoids risks and an indication of a country’s comfort levels in face of unpredictable situations and ambiguity. The higher a country’s score, the more likely they will be uncomfortable during unpredictable situations, low tolerance for ambiguity (and vice versa).

-China: low uncertainty avoidance, meaning they are willing to take more risks in business contracts

-Greece: high uncertainty avoidance, meaning they are unwilling to enter contracts that are unfamiliar and untraditional

Long-Term versus Short-Term Orientation

Reflection of how society maintains link with past while balancing challenges of present and future. Long-term: preparation for the future, willing to put projects on hold if it means that the future will have better stability; short-term: immediate gratification, willing to look for new methods to encourage pursuit of education and development, focused more on the present and past.

-Because of traditional values, Japan has an extremely high score of long-term orientation in comparison to the United States, who has a much lower score, indicating their short-term orientation

Indulgence

The extent to which a country controls their impulse and desires; the higher the score, the more likely they are to indulge themselves for gratification. The United States is a prime example of a high score of indulgence, while countries such as Germany practice much more restraint.

But what do all these factors mean?

Individually, these factors make sense on a surface level. However, in the real world, it is a combination of these factors that can indicate whether a foreign country is a good candidate for a company’s product or service. Countries that have a high uncertainty avoidance and a high long-term orientation indicate that these societies have a much more traditional influence than others. On the contrary, countries with the opposite characteristics may be more willing to explore new options in their pursuits of success.

While it may be daunted to work with a globalized team, it’s an advantage that companies need to take advantage of since modern technology makes it easier than ever. Different people from around the globe means different ways of thinking, and different ideas to bring to the table. Open minds can lead to open doors, and more importantly, they can lead to success.